Russia: Market Overview
November 2014
Growing the success of Irish food & horticulture
AIDAN COTTER
CHIEF
EXECUTIVE
Growing
the success
BORD BIA
JANUARY
2009
of Irish28food
& horticulture
Russia: Market Overview
Population: 142.5million
Moscow:12m, St Petersburg:5m
Over 70% live in urban areas
The World Bank predict 0.5% growth for 2014,
0.3% in 2015 and 0.4% in 2016
Growing the success of Irish food & horticulture
Russia: 2013 Irish Exports
Source: CSO
Growing the success of Irish food & horticulture
Russia: Retail Overview
Home of some of the fastest growing retailers in the
world: Magnit and X5
Market dominated by local players
Fragmented market share but being consolidated
Magnit: largest market share, expected growth
2014 22%
X5: Will focus on organic growth and supply chain
decentralisation
Auchan: Key in hypermarket sector
Sources: IGD and Passport
Growing the success of Irish food & horticulture
Russia: Retail Market
2011
2012
2013
2014f
2015f
2016f
Total retail market (USD bn)
578.7
612.0
662.8
727.8
804.2
886.2
Grocery retail market (USD bn)
309.9
320.2
350.1
383.0
420.6
462.0
Grocery retail market/capita (USD)
2,168
2,239
2,448
2,677
2,939
3,229
Grocery as a % of total retail
53.5%
52.3%
52.3%
52.6%
52.3%
52.1%
Source: IGD
Growing the success of Irish food & horticulture
Russian retail:
Relatively low purchasing power of many Russian
consumers, particularly in the regions, and
consequent lower demand for durable goods,
premium grocery and non-grocery goods.
142.5 million potential customers
Per capita spending in the regions outside Moscow
and St. Petersburg remains low.
Russia’s retail sector is growing
Economic vulnerability, dependence on oil and
mineral extraction for economic growth.
Growing the success of Irish food & horticulture
Russia: Manufacturing
Current drive to increase domestic food and drink
manufacturing
Lack of raw materials, need imports
Dairy ingredients and powders imported in
particular, almost all powder for infant milk formula
imported
Growing the success of Irish food & horticulture
Russia: Why Target this Market?
One of the biggest consumer markets in Europe
Increasing taste and demand for western goods
High income consumers and growth in middle class
Often poor quality and insufficient local production,
reliant on imports: certain types of alcohol, meat,
dairy, prepared foods, ingredients, seafood etc.
High rewards for those who invest in market
Growing the success of Irish food & horticulture
Russia: Market Trends
Health and wellness
Organic and Bio
Private Label goods
Convenience and on-the-go
Ready meals
Asian cuisine
Ruble devaluation has increased demand for
cheaper goods
Growing the success of Irish food & horticulture
Russia: Intricacies of doing business in
Market
Food of animal origin (dairy, meat, fish and seafood
etc.) needs certification from the Federal Service
for Veterinary and Phytosanitary Surveillance
Largest country in the world- often focus on main
cities Moscow and St Petersburg but opportunities
in regions
Specific and changing regulations- important to find
a good importer
Growing the success of Irish food & horticulture
Russia: Sustainability
Attitudes towards sustainability not strongly
developed
Not likely to be a strong selling point, organic and
bio products with perceived health benefits more
appealing to consumers
Growing movement for locally produced and
chemical free products
As market develops so will interest in sustainability
and product origin
Growing the success of Irish food & horticulture
Russia: Challenges doing business in market
Current sanctions: bans currently on EU meat,
dairy, fish, fruit and vegetables
Subsidiary bans and changes in regulations
Bureaucracy
Language
Ruble devaluation
Pervading negative attitude among officials to West
Growing the success of Irish food & horticulture
Russia: Product Suitability
Ingredients needed in Russian on label
Wide variety of products and new tastes in market
Pack sizes similar to Ireland
Packaging in Russia often simply designed, open to
a variety of types as long as comprehensible what
the product is
Packaging not as important as whether fit with
Russian taste
Growing the success of Irish food & horticulture
Russia: Pricing and Margin Expectations
Varies depending on route to market
Generally high margins
Local currency has devalued at 15%for the last
three months that makes margin of both importer
and exporters lower
Growing the success of Irish food & horticulture
Russia: Targets for Market Place 2015
12 buyers confirmed
5 dairy
4 alcohol
1 meat
1 fish and seafood
1 retail
Growing the success of Irish food & horticulture
Russia: Bord Bia office services
Market research and distribution of Russian
customs data
Itinerary development
Translations
1 EOP, 1 Fellow
Communicate changes in regulations and market
updates
Growing the success of Irish food & horticulture